Foreign portfolio investors (FPIs) have pulled out close to Rs 4,800 crore from equities in the first fortnight of September on rising US bond yields, a stronger dollar, and concerns over global economic growth. Before the outflow, FPIs were incessantly buying Indian equities in the last six months from March to August and brought in Rs 1.74 lakh crore during the period. In the coming days, FPIs are likely to press sale as the market is at record highs and valuations are high, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said. “With high bond yields in the US (the 10-year is at 4.28 per cent) and the dollar index above 105, FPIs are likely to sell more,” he added.
According to the data with the depositories, Foreign Portfolio Investors (FPIs) pulled out a net sum of Rs 4,768 crore from the equities so far this month (till September 15). This figure includes bulk deals and investments through the primary market. This came after FPI investment in equities had hit a four-month low of Rs 12,262 crore in August. “The net outflow (in September) was mainly due to uncertainties surrounding the global interest rate landscape, particularly in the United States, and concerns regarding global economic growth,” Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, said.
As global conditions evolve and India’s economic fundamentals remain robust, there’s reason to maintain a positive outlook for the markets shortly, he added. On the other hand, FPIs invested over Rs 2,000 crore in the country’s debt market during the period under review. With this, the total investment by FPIs in equity has reached Rs 1.3 lakh crore and over Rs 30,200 crore in the debt market this year so far. In terms of sectors, FPIs have been consistently buying capital goods and power. Even though the foreign investors have been sellers, it didn’t impact the market at all since it was neutralised by domestic institutional investors. Additionally, hyperactivity by retail investors is also contributing to the bullishness in the market, Geojit’s Vijayakumar said.